NPS Maturity & Pension Calculator
NPS Maturity Summary
⚠️ NPS returns are market-linked and not guaranteed. Annuity rates vary by annuity provider and product type. The 60% lump sum withdrawn at retirement is tax-free; annuity income is taxable as per your slab. NPS is governed by PFRDA (Pension Fund Regulatory and Development Authority).
NPS Tax Benefits Summary
| Section | Benefit | Limit |
|---|---|---|
| 80CCD(1) | Self contribution deduction (part of 80C limit) | Up to 10% of salary (or 20% of gross income for self-employed), max Rs.1.5 lakh |
| 80CCD(1B) | Additional self contribution — OVER AND ABOVE 80C | Rs.50,000 additional deduction |
| 80CCD(2) | Employer's contribution to NPS | Up to 14% of salary (govt) / 10% (private) — NOT part of 80C limit |
| At maturity | 60% lump sum withdrawal — tax-free | Full exemption on lump sum |
| At maturity | 40% must buy annuity — pension is taxable | Annuity income taxed per slab |
Frequently Asked Questions
Tier I is the primary pension account — mandatory for NPS, with restricted withdrawals and tax benefits. Contributions are locked until age 60 (with limited partial withdrawals). Tier II is a voluntary investment account — no lock-in, full liquidity, but no additional tax benefits (except for government employees under Section 80C). Most people open Tier I first; Tier II is optional and can be used as a flexible investment account alongside Tier I.
Premature exit (before 60) is allowed after 3 years of NPS subscription, but with restrictions: At least 80% of the corpus must be used to purchase an annuity (vs 40% at normal exit at 60), and only 20% can be withdrawn as a lump sum. The lump sum portion is taxable if withdrawn before 60. After 60, 60% lump sum is tax-free and only 40% goes to annuity. Premature exit is financially unfavorable — NPS is designed for long-term retirement savings.
Retirement Planning & Estate Documentation
SG Law India assists with Will drafting, nomination documentation, and legal compliance for NPS subscribers in Pondicherry.